The Study of Spatial Competition and Pricing Strategy

• Main Authors: Lo, Kuang-Pu, 羅光甫
• Other Authors: Han, Chien-Shan
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/52645328961733591220

碩士 === 輔仁大學 === 金融研究所 === 96 === Chain stores’ competitive strategy is keeping to expanding the branches before market saturation to seek the maximum of profit and to exclude any potential competitors. However, this strategy may cause the diminishing of profit after market saturation. Hence, once chain stores adopt this strategy, they must also consider the location of each branch to avoid the diminishing of profit. Therefore, how to maximize the profit and exclude the potential competitor by choosing the location and expanding the branches is the main subject we are going to study. In this thesis, we use game-theory model to analyze the chain stores’ competitive strategy and pricing strategy. Under the assumption of profit maximum, we discover the location of each branch will set in the location where the market shares equally. When market is monopoly, the longer the market length or the higher price the consumers would pay, the more branches would be open and the higher prices would be set. If the cost of expanding branches is higher, the result is on the contrary. Furthermore, when there exists potential competitors, even though the cost of expanding branches is high, the first-entry firm would still set more branches to stop potential competitors to enter. In the meanwhile, as the market length is longer or the consumers would pay higher, the result is on the contrary.